My Biggest Financial Mistake

Happy Financial Literacy Month…the month where we shine a spotlight on financial education and the importance it plays in our lives. I talked before about my financial bounceback and received a few messages from readers about how that story showed them that anyone can have financial hardships.

Now it’s time to be even more transparent. To kick off Financial Literacy Month, I want to share my biggest financial mistake to date in hopes to further inspire people.

Whenever I want to accomplish something, I start with a plan and follow it no matter what. Some people called it stubbornness, but I like to call it persistence. One day, my persistence bit me in the ass-et, causing all kinds of grief and hardship. Having a plan can be great, until it’s not.

At one point in my life, I decided to leave a great-paying job to become a full-time entrepreneur. I was on a quest to follow my dreams. I knew the pitfalls and risks that came with my decision, but I felt like I was immune because, well it was my calling. Within a few months of taking the leap, I fell behind on my mortgage and almost lost my home.

Letters from the bank — and ultimately, their lawyers — came pouring in. In no time, my family was facing foreclosure. This was the first time anything of this magnitude had ever happened to me. I didn’t know where to start or what to do.

My family and I braced ourselves for what seemed like the inevitable: we packed our bags with nowhere to go. Just when I thought all hope was lost, I learned about less extreme ways of handling and resolving missed mortgage payments.

One option was a short sale. I could sell my home for less than I owed on the mortgage, if my lender would approve the transaction. The outstanding balance would then be forgiven. Another option was a deed in lieu of foreclosure. This would allow me to voluntarily give up my rights to the property instead of going through the stressful and costly legal foreclosure process.

Ultimately, I didn’t have to do either because I found one more option. At the time there was a federal government program called the Making Home Affordable Program which helped homeowners avoid foreclosure. I was able to do a loan modification where my lender changed the terms of my loan to allow me to make lower payments so my family could stay put. It made staying in our home a reality.

The loan modification began with a three-month trial period. After I successfully made the first three payments on time, the modification became permanent. While that was great news, the delinquent payments remained a blemish on my credit report. However, time does heal all. As I continue to make on-time payments toward my mortgage, the delinquencies will eventually fall off. Lesson learned. The next time I follow a dream, I’ll do it a lot more carefully.

Now that I put all my skeletons on the table, what is your biggest financial mistake? Use the comments below to tell us about your biggest financial mistake, what you learned from it and how you overcame it.

Ash Exantus aka Ash Cash is one of the nation’s top personal finance experts. Dubbed as the Financial Motivator, he uses a culturally responsive approach in teaching financial literacy. He is the Head of Financial Education at BankMobile and Editor-in-Chief at Paradigm Money. The views and opinions expressed are those of Ash Cash and not the views of BankMobile and/or its affiliates.

Being well-prepared for retirement is wonderful, but there is no fail-safe plan. Things can unravel due to many inherent post-retirement risks. Understanding those risks that lie ahead and how they can harm financial security is key to making critical adjustments in a retirement plan. Sometimes without those changes, the impact of unfavorable and unpredictable events can be far more severe.

“Once you have a retirement plan in place, it’s not set in stone,” says Clayton Alexander (www.retireteton.com), an investment adviser and founder of Teton Wealth Group. “Things change. You may add or lose family members, your retirement goals may change, the economic environment may create new considerations, and financial innovations may present new strategies. Once per year is a minimum in terms of making sure your retirement plans (and beneficiaries) are constantly up-to-date.”

Alexander says retirees and those making retirement plans should be aware of these five risks:

Longevity.Running out of money before they die is one of the primary concerns of most retirees. This worry is heightened by the fact that the average life expectancy has increased. “A pension or an annuity can lessen the risk, but carefully investigate any company where you’d place an annuity and be cautious of fees and interest rates,” Alexander says. “It’s best to tailor your plan to run to life expectancy plus five years.”

Loss of income. “Make sure both you and your spouse are protected from the unexpected,” Alexander says. “Consider the financial impact of the loss of one spouse. Remember that your surviving spouse will only get the highest of your two Social Security checks. A spouse’s death can bring additional financial burdens, including lingering medical bills and debts. Life insurance and estate planning are important vehicles to protect survivors.”

Health care costs. Longer life expectancy could lead to high costs in a long-term care facility. “It’s estimated that approximately 50% of people over 65 will need long-term care,” Alexander says. “Do not overspend on policies that may be subject to drastic premium increases. And surprising to some, Medicare is not free — your premiums for coverage are usually deducted from your Social Security check. Medicare doesn’t cover dental, hearing or vision, is subject to deductibles, and doesn’t cover long-term care. Long-term care insurance is advisable.”

Negative return risk. “A 50% gain does not allow a portfolio to recover from a 50% loss,” Alexander says. “In fact, a 100% gain is required to restore a 50% loss. The ‘buy and hold’ strategy that works when you are young — where you wait for the markets to come back up after a downturn — does not apply in retirement as we saw in 2008, when many people’s retirements were wiped out. Common stocks have substantially out-performed other investments over time and thus are usually recommended for retirees as part of a balanced asset allocation strategy, but the rate of return you earn can be significantly lower than the long-term trends.”

Inflation risk. “You should plan on prices for food, goods and services getting higher during retirement, reducing your buying power incrementally as you are living on a fixed income,” Alexander says. “Your retirement plan has to factor that in. Ways retirees can curb the effects of inflation include annuity products with a cost-of-living adjustment feature and investing in equities, a home, and other assets.”

“Understanding what the potential post-retirement risks are and considering them in the retirement planning stage,” Alexander says, “can help to ensure that they are mitigated and properly managed.”

About Clayton Alexander Clayton Alexander (www.retireteton.com) is an investment adviser and founder of Teton Wealth Group. A graduate of Dixie State University with a B.A. in administration, Alexander also worked at Northwestern Mutual and Goldman Sachs. He is licensed for life and health insurance in the state of Utah and has passed the Series 65 securities exam. Alexander focuses on building holistic retirement plans, and with the launch of Teton Wealth he developed the four-step Ascent Plan – a system to help clients gain clarity and perspective on creating a financial plan for safe, secure and tax-efficient retirement income and estate transition.

Are Americans Undervaluing Paid Time off + Quick Trip Tips

It’s August, which for many Europeans means taking almost the entire month off. So why is it difficult for Americans to take even the little vacation time they receive? A recent piece in The Economist states workers in the U.S. are doing it all wrong by going on short holidays, which can add even more stress or taking none. Instead, it’s essential for employees to recharge their batteries. It’s also beneficial for companies to have a consistent holiday month during which junior employees can head to the beach, and managers can take stock of things, says the report.

While many Americans may not receive paid time off, especially those that only work part-time, even those who receive it generally don’t take all of it. What we don’t realize is that not taking a vacation is like giving money back to your employer, especially with companies that have a use it or lose it policy. Which should encourage employees to use their time but unfortunately it does not. According to recent polls conducted by Bankrate, nearly 2600 US adults say they plan to take a quarter of their vacation days while 4% are not planning to take any vacation time at all.

Time off is a valuable perk, to the tune of millions of dollars! Just to bring the point home in 2017 Americans gave up 212 million days off that amounts to $62.2 billion in lost benefits! So, take your vacations and follow the tips below to not break the bank while taking time off:

Take a Staycation – Stay local and vacation somewhere that is less than a day drive away, this helps save gas, mileage, and spending on lodging. Look for local attractions, vineyards, interesting museums and landmarks or even travel to your closest big city and be a tourist for a day. You would be amazed at how much you can discover and learn by staying local and all on the cheap! It’s a bonus if you have friends in the town your visiting they can serve as a tour guide and let you stay over for free if they have the room.

Book Flights Off-Season – July 4th, Memorial Day and Labor Day seem like a great time to go on vacation; unfortunately, everyone is planning to take time off during those busy weekends, and ticket prices are through the roof because of it. Book flights after major holidays and during the week you will generally find that they are cheaper than weekend flights.

Take a Road Trip – Road trips are fun and cheaper than taking a plane, especially if you must rent a car when you get to your destination anyway. Plan cool stops along the way and finds interesting places to eat that way you can make the journey part of the vacation.

Plan to Eat In – Food adds up on vacation so pack food and making one or two meals in your hotel can keep you under budget.

Top Ten Freshman Money Myths

Starting college is one of the most important and exciting times of your life. Now that you’re all “checked-in,” enjoy your college experience without worrying about where your next meal will come from by chasing away these common freshman money myths. (more…)